The Market

Business Legal Expenses Insurance

Although legal expenses insurance (LEI) has been available in continental Europe for over 100 years, it only became legal in the UK as recently as 1974.

Initially it was offered as an add-on to personal lines products such as household insurance and motor insurance, primarily to cover expenses incurred in pursuing uninsured loss recovery (ULR).

In an increasingly litigious society, however, there is a growing recognition of the need to provide legal expenses insurance for both private individuals and companies' legal expenses either as a stand alone product or as a part of a commercial package.

Commercial LEI protects against "the cost of potential, commercial legal disputes, providing the legal advice and representation businesses need to minimise their exposure to the risks". A mere 15% of UK companies currently hold stand alone LEI, and for SMEs the figure is just 10%.

Because of the specialist skills this type of cover requires, major insurers have traditionally relied on specialist LEI providers to service client accounts. More recently, while these specialists still dominate the UK market, larger insurers have begun developing their own products.

January 2008